Safilo Group S.p.a. · MIL:SFL
Safilo — H1 2020 Earnings Presentation
29 slides from Safilo's earnings presentation, Jul 31, 2020
Slide 1: H1 2020 Results
H1 2020 RESULTS July 31, 2020 Safilo
Slide 2: Disclaimer
DISCLAIMER This presentation may contain forward looking statements based on current expectations and projects of the Group in relation to future events. Due to their specific nature, these statements are subject to inherent risks and uncertainties, as they depend on certain circumstances and facts,
Slide 3: A Period of Unprecedented Challenges
A PERIOD OF UNPRECEDENTED CHALLENGES A POSITIVE START TO THE YEAR… ABRUPTLY INTERRUPTED IN MARCH BY THE COVID-19 PANDEMIC Our immediate focus on: PROTECTING THE HEALTH AND SAFETY OF ALL OUR PEOPLE Immediate and rigorous implementation of all the safety and prevention regulations provided by governme
Slide 4: A Period of Unprecedented Challenges: Q2 2020 business drivers
A PERIOD OF UNPRECEDENTED CHALLENGES Q2 2020 EXTRAORDINARY BUSINESS DRIVERS HEAVILY IMPACTING SALES AND ECONOMIC RESULTS ➢ MASSIVE SHUTDOWN OF COMMERCIAL ACTIVITIES ACROSS THE WORLD IN APRIL, FOLLOWED BY VERY GRADUAL AND PATCHY RE-OPENINGS IN MAY, RESULTING IN: • a two-month sales decline of ca 75%
Slide 5: Our Business Strategy Kept Moving Forward: Acquisition
OUR BUSINESS STRATEGY KEPT MOVING FORWARD ACQUISITION OF EFFECTIVE JUNE 1ST ➢ a disruptive, digitally native eyewear brand ➢ an advanced e-commerce business model, with unique digital and social media skills ➢ a compelling price-to-value eyewear product offer, appealing to a broad range of consumers
Slide 6: Our Business Strategy Kept Moving Forward: Digital business
OUR BUSINESS STRATEGY KEPT MOVING FORWARD THE GLOBAL PANDEMIC FURTHER ELEVATING THE IMPORTANCE OF THE DIGITAL BUSINESS ➢ OUR ORGANIC ONLINE BUSINESS UP 31% IN H1, ACCELERATING TO +38% IN Q2, DRIVEN BY: • Smith North America e-commerce business • Internet pure player customers • Strong growth also in
Slide 7: Our Business Strategy Kept Moving Forward: New Ports license
OUR BUSINESS STRATEGY KEPT MOVING FORWARD NEW LICENSE AGREEMENT WITH FOR MAINLAND CHINA ➢ Founded in Toronto in 1961, Ports was the first luxury fashion label to enter the Chinese market in the early 90s ➢ Ports is a new business opportunity in Safilo’s brands portfolio to work with a locally releva
Slide 8: H1 2020 Key Economic and Financial Highlights
H1 2020 KEY ECONOMIC AND FINANCIAL HIGHLIGHTS Q2 SALES DISRUPTION IMPAIRING ECONOMIC RESULTS. TIGHT CASH MANAGEMENT PROTECTING LIQUIDITY AND CONTAINING GROUP NET DEBT in millions of Euro, % of sales, % change @CFX vs same periods of 2019 Q1 2020 Q2 2020 H1 2020 221.1 114.5 335.6 NET SALES -11.5% -53
Slide 9: Sales and Economic Highlights
SALES AND ECONOMIC HIGHLIGHTS 8
Slide 10: Net Sales by Geography: Europe
NET SALES BY GEOGRAPHY in millions of Euro and % change vs same periods of 2019 Q2 2020 H1 2020 114.5 335.6 NET SALES -54.0% cur.FX -32.3% cur.FX -53.7% const.FX -32.7% const.FX ➢ Wholesale2 -55.2% in Q2/-33.2% in H1 57.2 165.0 • June turning slightly positive in 3Os -52.8% const.FX -32.9% const.FX
Slide 11: Net Sales by Geography: North America
NET SALES BY GEOGRAPHY in millions of Euro and % change vs same periods of 2019 Q2 2020 H1 2020 114.5 335.6 NET SALES -54.0% cur.FX -32.3% cur.FX -53.7% const.FX -32.7% const.FX ➢ Organic business -65% in Q2/-38% in H1 44.1 128.5 • Slower pace of re-openings and social -46.1% const.FX disruptions on
Slide 12: Net Sales by Geography: Asia Pacific and Rest of World
NET SALES BY GEOGRAPHY in millions of Euro and % change vs same periods of 2019 Q2 2020 H1 2020 114.5 335.6 NET SALES -54.0% cur.FX -32.3% cur.FX -53.7% const.FX -32.7% const.FX ➢ Q2 lack of business in travel retail 8.8 23.7 channel, ca 40% of the regional sales ASIA PACIFIC ➢ Business in HK, Korea
Slide 13: Economic Performance
ECONOMIC PERFORMANCE MASSIVE REDUCTION IN SALES OVER-PROPORTIONATELY WEIGHED ON OUR INDUSTRIAL AND OPERATING COST STRUCTURE, NOTWITHSTANDING STRUCTURAL SAVINGS AND CONTINGENCY MEASURES FOR A TOTAL OF 28M IN H1: ➢ contingency measures initiated in March, including the extensive use of applicable pers
Slide 14: Industrial Performance
INDUSTRIAL PERFORMANCE in millions of Euro, % on sales, % and pps change vs same periods 2019 Q2 2020 H1 2020 39.2 -71.2% 148.6 -44.2% ➢ Sharp impact from volumes decline 34.2% -20.5 pps 44.3% -9.4 pps ➢ +7m accruals for > obsolescence, product returns, orders cancellation and GROSS PROFIT some fixe
Slide 15: Operating Performance
OPERATING PERFORMANCE in millions of Euro, % on sales, % and pps change vs same periods 2019 Q2 2020 H1 2020 -34.1 n.s. -28.3 n.s. ➢ Q2 SG&A costs -33.7% vs last year, incidence -38.3 pps on sales (ex D&A) +21.5 pps: -29.8% -8.4% -16.7 pps ADJUSTED1 • Selling exp. -40.4%, driven by strong EBITDA mar
Slide 16: Net Result
NET RESULT in millions of Euro, % on sales, % and pps change vs same period 2019 H1 2020 -63.7 n.s. ➢ Higher net financial charges mainly due to negative exchange -19.0% -20.7pps rate differences and, to a lesser degree, to the higher average gross debt, partially counterbalanced by recognition of d
Slide 17: Financial Highlights
Safilo FINANCIAL HIGHLIGHTS 16
Slide 18: Free Cash Flow
FREE CASH FLOW in millions of Euro CASH PROTECTION MANAGEMENT RESULTING IN A SLIGHTLY POSITIVE FREE CASH FLOW BEFORE ACQUISITIONS H1 2019 H1 2020 CASH FLOW FROM OPERATING ACTIVITIES, ➢ NEGATIVE ECONOMIC PERFORMANCE before change in WC 26.5 (39.3) CHANGES IN WORKING CAPITAL 11.4 56.3 ➢ POSITIVE WC MA
Slide 19: Group Net Debt and Cash Position
GROUP NET DEBT AND CASH POSITION in millions of Euro GROUP NET DEBT SUBSTANTIALLY IN LINE WITH DECEMBER 2019, EXCLUDING THE IMPACT OF THE ACQUISITIONS Dec.31, 2019 March 31, 2020 June 30, 2020 CASH 64.2 99.6 110.9 ➢ 150M TERM AND REVOLVING CREDIT POSITION FACILITY FULLY DRAWN IN MARCH ➢ NEW TERM LOA
Slide 20: Business Update in Relation to the Covid-19 Pandemic
BUSINESS UPDATE IN RELATION TO THE COVID-19 PANDEMIC ➢ In July, preliminary net sales performance points to a business rebound, with total net sales expected to turn positive compared to the same month last year; ➢ Business performance in North America, a clear driver of the monthly sales uplift, fo
Slide 21: Appendices
Safilo Appendices 20
Slide 22: Notes to the Presentation
Notes to the presentation 1 In H1 2020, the adjusted economic results excludes non-recurring costs for Euro 13.2 million (Euro 10.3 million on EBITDA), due to restructuring expenses related to the ongoing cost saving program. In Q2 2020, the adjusted EBITDA excludes non-recurring costs for Euro 7.9
Slide 23: Net Sales by Geographic Area
Net Sales by geographic area % Change % Change (Euro million) H1 2020 % H1 2019 % at current forex at constant forex Europe 165.0 49.2% 246.3 49.7% -33.0% -32.9% North America 128.5 38.3% 169.5 34.2% -24.2% -26.0% Asia Pacific 23.7 7.1% 43.5 8.8% -45.4% -45.9% Rest of the world 18.4 5.5% 36.7 7.4% -
Slide 24: Economic Highlights
Economic highlights H1 2020 H1 2019 % Change Q2 2020 Q2 2019 % Change (Euro in millions) Net sales 335.6 495.9 -32.3% 114.5 248.6 -54.0% Gross profit 148.6 266.2 -44.2% 39.2 135.9 -71.2% % on net sales 44.3% 53.7% 34.2% 54.7% EBITDA (38.6) 36.3 n.s. (42.0) 17.4 n.s. % on net sales (11.5%) 7.3% (36.7
Slide 25: Balance Sheet
Balance Sheet June 30, 2020 December 31, 2019 Change Net working capital 196.7 250.8 (54.2) Tangible, Right of Use, and Intangible fixed assets 348.3 240.6 107.7 Goodwill 33.2 0.0 33.2 Non-current assets held for sale 5.5 5.5 0.0 Other assets/(liabilities), net (187.9) (80.1) (107.8) Net invested ca
Slide 26: Net Working Capital
Net Working Capital June 30, 2020 June 30, 2019 Change Trade receivables 150.3 199.5 (49.2) Inventories 228.4 236.1 (7.7) Trade payables (182.1) (178.3) (3.8) Net working capital 196.7 257.4 (60.7) % on net sales 25.3% 25.9% 25
Slide 27: Free Cash Flow
Free Cash Flow (Euro in millions) H1 2020 H1 2019 Cash flow from operating activities before changes in working capital (39.3) 26.5 Changes in working capital 56.3 11.4 Cash flow from operating activities 17.0 37.9 Cash flow for investment activities (9.3) (15.8) Cash payments for the principal port
Slide 28: Exchange Rates
Exchange Rates (Appreciation)/ (Appreciation)/ As of Average for Depreciation Depreciation June 30, December 31, June 30, June 30, Currency Code % % 2020 2019 2020 2019 US Dollar USD 1.1198 1.1234 -0.3% 1.1021 1.1298 -2.5% Hong-Kong Dollar HKD 8.6788 8.7473 -0.8% 8.5531 8.8611 -3.5% Swiss Franc CHF
Slide 29: Brand Portfolio
Brand Portfolio Safilo BOSS MISSONI = JIMMY CHOO ELIE SAAB MOSCHINO GIVENCHY THE CARRERA TOMMY SBHILFIGER HUGO vans MARE VACOBS kate spade P@RTS #4 UNDER ARMOUR . rag & bone DIOR SMITH Newvons BANANA REPUBLIC elasta ISABEL MARANT CM ») LOVE = FEND! MOSCHINO CHESTERFIELD" MISSONI Polaroid pierre card